Today China is experiencing a new 'China boom,' with the construction of infrastructure and the creation of substantial wealth.

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Mr. Schell is director of the Asia Society’s US-China program. His engagement with the Middle Kingdom spans a lifetime and 10 books. The most recent is "Wealth and Power: China's Long March to the 21st Century," with John Delury. Schell spoke to the Monitor from his Park Avenue office.

Q. You first visited China after the Cultural Revolution. People were poor, riding bicycles, wearing Mao suits. China now has 150 billionaires.

When I first went to China in 1975 there was not one scintilla of evidence, nor was there one single person who could even hallucinate that China would turn in the direction it did. This is very important to remember. It was a time of class struggle -- dark, deep, and savage. But then China had been in a state of quite incredible, agitated self-invention for the last 150 years. Everything has been repeatedly up for grabs since China’s dynastic system fell in 1911. It became the hapless “sick man of Asia” trying to “save” itself by trying one different system after another, and it evolved with no consistent or familiar model in mind.

But with the advent of Deng Xiaoping and his new “get rich is glorious” attitude, it suddenly began to galvanize. After years of Mao ideology with millions “sent down” to toil with the masses in the name of building a Marxist utopia, people were weary of all the struggle, upheaval, and radical experimentation. They yearned just to be able to lead their lives. And today there is nothing comparable to what some call “the China boom.” The rapidity of nation building, the construction of infrastructure and the creation of substantial wealth is absolutely extraordinary in world history.

Q. Does this mean they cancelled Mao’s communist revolution?

Not exactly! They cancelled Marxism, but not Leninism. Leninism is the organizational cement that holds things together through the party and the Leninist model is alive and well: China has a strong party, a big leader, and rigid orthodoxy and single party rule. But class struggle and Mao’s whole revolutionary political program has been abandoned.

Q. The party offers stability?

Yes. But a history of changing its mind all the time -- never mind the false starts and dead ends it led China into -- gives China a deep instability. When you don’t know who you are, you keep trying to embrace different alternatives, well, you end up being off balance. If China were a person you would say it was having an identity crisis. This is the legacy of the 20th century, and of so many experiments to reinvent itself: Who are we? What are our foundational principles? Is it Confucius, Mao, Sun Yat-sen, Chiang Kai-shek? Is it Qing dynasticism? No one quite knows what it now means to be “Chinese.

It’s really more of a vacuum. Everyone is groping and grasping. People are turning to Buddhism, Christianity, self-help, and Taoism. CEOs and billionaires run around with their spiritual masters and visit meditation rooms. Others look uncertainly toward democracy. There is real uncertainty about what is appropriate. And this is the challenge of the party. What sources of legitimacy should it appeal to? What happens if the economy goes south? What holds things together? One temptation is to resort to nationalism. But, that’s a dangerous drug, especially when taken in large doses.

Q. Does nationalism explain Beijing's new tensions with Tokyo in the East China Sea. China now claims air-defense zones.

I think so. People are nervous about the future, so leaders rattle the saber in the Pacific with grand claims on these small islands to show China’s new wealth, power and create a sense of pride. They’d like to shift attention from internal strife by identifying a clear external enemy [Japan] and then appeal to people’s deep patriotism. This is an important part of the “China dream.”

In the West we like to think that history moves ineluctably toward openness and democracy. But in China what animates history is not so much a desire to move toward enlightenment but a deep desire to see the country restored to greatness. The key mantra is wealth and power, the two Chinese characters that mean a strong country and a wealthy people. These animate a nationalist dream. And a proof of of real “wealth and power” is the ability to stand up against the “great powers.”

Q. Is nationalism not sated by gains in wealth and power?

Not necessarily. Sometimes nationalism only becomes more excited by the prospect of wealth and power. A hundred years ago most Chinese intellectuals saw China’s great weakness as caused by a lack of nationalism, and believed that it was the only force capable of making the nation cohere. Now, nationalism has long-since gained momentum, even a dangerous momentum.

Q. You feel this is shared among ordinary people, not just elites?

I do. There is a very deep yearning among Chinese to see their country rejuvenated. With his “China dream,” President Xi Jinping has tapped into this very deep aspiration to national greatness. Canadians don’t have such an aspiration to greatness. Nor do Australians or Indians. But this urge to greatness is something China shares with America, almost an obsession to be No. 1, which in China engenders a fierce amount of determination to succeed.

The tragedy is that in this regard, Abe is quite similar Xi Jinping. Both come from elite families and both are dedicated to unifying their nations by building them up. That can be dangerous. Japan has the United States to keep admonishing it to remain moderate and it does play a restraining role. But it also has a treaty obligation to defend Japan. It is a dangerous situation. The Diaoyu Islands have become the new Taiwan. Much of that tension has now been transferred to conflict with Japan.

Q. They are now shadow boxing, but can China afford a war?

No. A war would be lunatic for China. And, they could very easily end up with another 1895 when they got their new Navy sunk in one day by Japan. I don’t think China is yet ready to tangle with Japan as a military equal. Even these jousting matches have tremendous other costs for China. In the process it has sadly alienated its neighbors: Vietnam, Burma [Myanmar], the Philippines, Malaysia, and it has lost a tremendous amount of good will. Moreover, Japan is the third largest economy and China’s third largest trading partner, not things to trifle with.

Q. You’ve argued that China has a deep, unrequited desire for respect.

The craving for respect is even deeper than the craving for wealth and power. And it is so profound, and it’s why you get so much rhetoric about “equality,” “humiliation” and “hurting the feelings of the Chinese people” – all psychological terms for which Marxism-Leninism has no category. But their expression represent a people feeling spurned, smarting from a sense that despite the fact that they have chinned themselves up to new heights of development, they are still being looked down on, and are not considered as equals and are not respected.

But the inescapable fact is that people outside of China do not want to emulate their political system and culture. Maybe [Russian President Vladimir] Putin does, but Putin is a thug.

So the yearning for respect is one of the most elusive and ineffable of desires, but one that the Communist Party is least equipped to understand or deliver. Why? Because it can’t be had by government manipulation or control.

Q. China has been hoping its campaign for “soft power” will help in gaining respect.

They are spending fortunes in their quest for soft power. But they are gaining very little because at the same time, even as they try to seduce people, they are offending them. The most basic element of soft power is that that it derives from first respecting your own people. A government has to arrive at a relationship where they are able to be spontaneously creative and engage in a full range of human activities…not just be in business.

This is the part the Chinese Communist Party has not yet been able to figure out, and why, despite buying TV channels, PR firms, billboards and setting up hundred of Confucius Institutes, soft power is still so elusive.

There are certain things the party won’t do. One is meet with the Dalai Lama and another is release Liu Xiaobo. They would see this as sign of weakness, and weakness has no role in the wealth and power equation. What is more, once something becomes the darling of the West it often sadly dooms that thing at home. In a world of nationalism and patriotism the party would rather cut off their nose to spite their face -- and they are -- than yield on such issues.

Q. President Obama recently met the Dalai Lama, another Nobel prize winner. Was that a good idea?

Yes, because the United States is, after all, an open society -- and just as China doesn't want us interfering in their internal affairs, we don’t want them interfering in ours. We should meet with whomever we wish.

They do care, because they view such a meeting as an affront to their game-plan. But, this is something they can’t control, even as they are, in fact, controlling an ever-wider circumference of things around them, even Bloomberg News. They are also trying to control the New York Times, American universities, etc., and they are doing a pretty good job of it. When is the last time you heard a university complaining about anything going on in a university program in China? Anyone who wants to deal with China now has the problem of dealing with this expanding circumference of control.